Friday Mar 29, 2024
Friday Mar 29, 2024

EXPLAINER: How Barcelona tries to get finances back on track


Nepalnews
2022 Feb 18, 12:50, Madrid

Barcelona is back in the second tier of European soccer after nearly two decades contending among the elite in the Champions League, a blow to its prestige and a further hit to its dire financial situation.

It debuts in the Europa League against Napoli on Thursday, 18 years after it last appeared in the lower-tier UEFA Cup. It had made it to the knockout stage of the Champions League every time since then, winning the competition five times.

The Catalan club’s quick demise has been directly related to its recent financial struggles, which ultimately resulted in the loss of Lionel Messi to Paris Saint-Germain last summer.

Here is a look at how Barcelona’s financial struggles began and what the club has been doing to try to recover and regain its status as a top contender in Europe.

What Happened?

Most of the blame for Barcelona’s financial struggles has been linked to former president Josep Bartomeu, who resigned in 2020 — denying wrongdoing — amid accusations of irregularities in his administration and a fallout with Messi. The COVID-19 pandemic also affected the club, but the increasingly high salaries of the first-team squad created most of the problems. The spending on players surpassed the club’s total income when new president Joan Laporta arrived last year. Laporta recently handed prosecutors what he called evidence of the irregularities by the former president.

Debts

The club’s debt reached a whopping 1.3 billion euros (nearly $1.5 billion), including almost 390 million euros ($443 million) related to player salaries and more than 670 million euros ($761 million) owed to banks. Some 40 million euros ($45 million) were linked to membership losses, while the impact of the pandemic was 91 million euros ($103 million). The club — which is owned by its more than 137,000 members — had losses of 481 million euros ($547 million) and was left with a negative net worth of 451 million euros ($512 million). The club’s revenues for 2020-21 were 631 million euros ($717 million), 26% less than the 855 million euros ($972 million) from the previous year.

Players' Salaries

Players’ salaries rose 61% from 2016-17 until 2020-21 — from 471 million euros ($535 million) to 793 million euros ($901 million) — and Laporta said they would have reached 835 million euros ($949 million) — well over 100% of the club’s revenues — if action wasn’t taken. The players with the highest salaries included Messi, Antoine Griezmann, Philippe Coutinho and Ousmane Dembélé, who is the only one still in the squad after rejecting offers to leave in the winter transfer window. Laporta also accused Bartomeu of paying commissions to agents that were higher than usual, sometimes reaching 30%.

Salary Cap

The high salaries made it difficult for Barcelona to put its squad together as Spain has strict fair-play regulations that are mostly linked to clubs’ financial health. Each club has a different salary cap calculated based on factors that include revenues, costs and debts. It is proportional to roughly 70% of a club’s revenues. Barcelona’s cap for 2021-22 was slashed to 97 million euros ($110 million), becoming more than seven times smaller than that of rival Real Madrid. Barcelona’s struggles had already forced the league to cut the club’s cap from a league-high 671 million euros ($763 million) in 2019-20 to 382 million euros ($434 million) last season.

What was done

Laporta said he had to reduce salaries by about 200 million euros ($227 million), increasing the focus on promoting youth players to the first team, which was the case with the likes of Pedri González, Gavi Páez and Nico González. Also key were reducing salaries of some of its highest-paid players and signing free agents who were cheaper on the market.

Salary Reductions

The club started significantly reducing salary-cap space last year by renegotiating the salaries of players such as Gerard Piqué, Sergio Busquets and Jordi Alba. This year it also reduced the salary of Samuel Umtiti and continued to clear cap space with the departures of Coutinho and Yusuf Demir, which allowed the club to sign Ferran Torres, Dani Alves, Adama Traoré and Pierre-Emerick Aubameyang. The loan of Griezmann back to Atlético Madrid last season in part helped the Catalan club to sign Memphis Depay and Eric Garcia.

The Future

Laporta put in place a five-year restructuring project of the club’s finances. It included the refinancing of the club’s debt with Goldman Sachs in a loan of more than 500 million euros ($568 million) “to give the club breathing space and not to take anything from the members’ pockets.” The general assembly last year also approved a financing package of up to 1.5 billion euros ($1.7 billion) to revamp the Camp Nou Stadium and other club facilities, a project that had already been initiated but that was changed under Laporta. The club is also reportedly close to a new sponsorship and naming rights deal with streaming company Spotify to start at the end of this season as a replacement to Rakuten, which paid 55 million euros ($62 million) for the first four seasons with the club before extending it for another, for reportedly 30 million euros ($34 million). Playing in the Europa League means Barcelona will earn less in prize money than if it had advanced in the Champions League, but there were signs of better times to come in the budget for 2021-22, which foresees an income of 765 million euros ($870 million) — up from 631 million euros ($717 million) last season — and a debt reduction from 1.3 billion euros (nearly $1.5 billion) to 784 million euros ($891 million).

READ ALSO:

football Barcelona FCB Finance of FCB
Nepal's First Online News Portal
Published by Nepalnews Pvt Ltd
Editor: Raju Silwal
Information Department Registration No. 1505 / 076-77

Contact

KMC-02, UttarDhoka,
Lazimpat, Nepal

Newsroom
+977–01–4445751 / 4445754

E-mail
[email protected] [email protected]

Terms of Use Disclaimer
© NepalNews. 2021 All rights reserved. | Nepal's First News Portal